Monday, June 9, 2014

How to find luxury customers

The new frontier in luxury tourism
The luxury market is somewhere around 5% to 15% of the total tourism sector depending how you count and how you define luxury. Certainly more than a niche market, but nevertheless a rather smallish piece of the tourism and leisure pie hotly contested by many more stakeholders than the true size of that segment can sustain. Making matters worse is the way luxury is often being marketed, glorifying generic superlatives on the assumption that luxury customers are a class by themselves, all fitting the same profile. While in fact they are simply the upper range of the very diverse tourism and leisure audience with many distinct needs and responses. Selling luxury is not about knowing luxury, it is about knowing your audience.

The largest audiences are three markedly different groups: executive, retirees, and special occasions. As each of these audiences lies in very distinct market scopes that only the largest tourism and leisure providers have both the resources and market penetration to effectively reach all three. For most everyone else, focusing resources on one audience makes more business sense. Which one will be most profitable depends on your capacity to reach that audience at the least cost. If you already have corporate clients, then focusing on the executive market is a natural extension of your business but if you are located in a retirement area, then the retirees could be your natural market.

The executive market

If you already have satisfied corporate clients, you have a ready-made and receptive executive audience for your luxury leisure business. The most significant characteristic of this clientele is that - Time is more precious than money -. While they want to make the most of their scarce free time as their vacations are typically short, they can afford the premium of luxury, convenience and efficiency. That last point is really important to understand as, for example, saving them four hours on travel time is an extra half day of vacation to them. Booking a limo instead of the airport shuttle may only save them 30 minutes, but that’s 30 minutes earlier to relax at the pool.

Pay attention to their preferences for certain amenities and services and prepare them a travel kit that is business-like, short and efficient. When you prepare your proposal, think business, include comparative tables with key points, prices and time. They are accustomed to make decisions based on clearly laid out hard data and they will trust recommendations you make from those tables (where you will highlight your recommendations). Once sold, prepare a concise travel kit with the key data they will need that fits in a jacket pocket (⅓ sheet size), and never stuff it with flyers!

The retirees market

Possibly the most difficult market to connect with because today’s retirees no longer identify with their traditional market profile. More often than not, they dislike it and react negatively to it. Baby boomers are not the “silver hair” generation on cruise ship loungers, they are more likely to be found on the sailboat splashing in the waves showing off the “old” retirees watching from their loungers on the cruise ships. They do like resorts, but resorts with activities and party clubs nearby. Baby boomers are making up for the lost party time of their forties and fifties. They are also harder to notice in resorts and holiday destinations because, unlike the the “silver hair” generation, they cover their grey hair! The number of westerners who color their hair has exploded in the last decade. A seemingly unrelated factoid, but a very visible sign that reflects their difference in behaviour and interests.

While their activity profile is similar to that of the executive group, their pace is more leisurely. Whereas a half day sailing is just right for the executive, the retiree will prefer a full day. In contrast to the executives, they will take up your time to formulate and plan their vacations down to details. They require a lot of attention, but once satisfied, they are most likely to become faithful customers and a generous source of referrals.

Special occasions

Honeymoon may be the most common special occasion, but that segment also includes major sport events, wellness and spa, and even medical tourism. Rather than once a lifetime, I call them once a decade occasions being that theses days people are likely to have more than one honeymoon and may go to at least one world sport event and take a medical or wellness trip once as well. The downside with this segment is that even four special occasions in a lifetime hardly makes for repeat customers. But on the upside, because they are special occasions, many more of their friends are likely to be well aware of their special trip and who organized it.

Special occasions is specialized travel with challenges that are not cost effective to handle for most travel agents, which can be turned into a competitive advantage. If you ever tried to book a hotel and secure tickets for a major sport event at a competitive price, you know how difficult and time-consuming that can be. If you know how, you can easily beat your competitors. Medical tourism is a premium value market if you know how to handle local logistic and the required ancillary services. Very few travel agents offer wedding registry services because it is far too time consuming to manage unless they handle a lot of honeymoons. Yet, it is the single most important decision trigger for most newlyweds: It is not how much it will cost, but how to fund it! If you can help them with that, you have no competition.

Extend your audience!

Most audiences have a potential for luxury travel and leisure. It is a lot cheaper and easier to extend the audience you know than chasing a mythical luxury audience that does not really exist in and of itself, being a composite of all the traditional travel and leisure markets.

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